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While the Department of Telecom has issued show-cause notices to 13 companies for termination of the 85 new licences issued in 2008 who are "ineligible" for getting them, the telecom ministry has again rejected the allegation of any notional loss due to issuance of 122 new licences in 2008
New Delhi: The telecom ministry has informed the Public Accounts Committee (PAC) that it has issued show cause notices to 13 companies for termination of their licences, who are stated to be "ineligible" for getting them.
Based on the report of the CAG, the Department of Telecom (DoT) has "issued show-cause notices to 13 companies for termination of the 85 new licences issued in 2008. The companies have given their replies which are under examination," DoT said in its reply to PAC's questionnaire.
But, the ministry again rejected the allegation of any notional loss due to issuance of 122 new licences in 2008 and said the premium placed on the scarce resource from the perspective of a producer need not necessarily translate into a loss when seen from the view point of the consumer and public welfare.
"The concept of notional loss when spectrum is given at a price discovered few years earlier has to be balanced with the gains accruing to the consumers and the general improvement in public welfare in the form of faster economic growth," the DoT said.
The PAC, headed by BJP leader Murli Manohar Joshi, had sent 40 questions to the DoT relating to 2G spectrum scam.
Suggesting that notional loss reported by the audit report should be seen in light of benefit that it has gone to consumers and for public welfare in large in form of quick economic growth.
The DoT said the objectives of the Telecom Policy since 1999 is to increase tele-density and affordability for consumers, while maintaining a level playing field between incumbents and new players as well as revenue accrual for the government.
The Department pointed out that Telecom Regulatory Authority of India (TRAI) has also not recommended any methodology for auctioning second generation (2G) spectrum in its report of 2005, 2007 and 2010 related to telecom licences and spectrum allocation.
"Theoretical exercises based on economic modelling are fraught with simplifying assumptions that make the valuations unreliable, and no methodology can therefore be suggested by the Department in this regard," it said.
DoT pointed out that the CAG has not considered recommendation of TRAI made that spectrum in the 800, 900 and 1800 MHz band (presently used as 2G spectrum) should not be subject to auction.
Spectrum in 800 and 900 Mhz bands shall however be subject to auction as and when it is reframed for 3G and future technologies.
Only 2% of films in India are able to garner 100% of their investment, while 98% of the movies flop. There are a number of people who want to invest in the business, but they are often turned off because of the lack of transparency and uncontrolled process costs in the industry
The Indian media and entertainment (M&E) industry is expected to grow at a compound annual growth rate (CAGR) of 14% to $28 billion by 2015, but investors are staying away from the sector due to lack of transparency and uncontrolled process costs, according to a financial advisor to the global entertainment industry.
"There are lot of opportunities in the Indian M&E industry, but due to bad scripts, bad-budgeting and bad production prices, the potential of the country's entertainment business remains untapped and investors lose an opportunity," said Jane Gordon, chief executive, Moneypenny. Established in 1980, Moneypenny is a group of companies, which provides specialist financial services to the global entertainment industry. Ms Gordon was among the panellists at FICCI FRAMES 2011.
She said, India could follow co-production and co-financing model similar to that of Europe. Co-production had reached a stage of maturity in Canada, Australia and Europe, which allows entertainment industry players to successfully piece together finance for their projects, Mr Gordon added.
Calling for transparency in reporting profitability of film ventures, Bobby Bedi, managing director, Kaleidoscope Entertainment, said the fiction (about profit numbers) created by filmmakers puts off real investors.
Mr Bedi, who has used funding for his films, said that earlier financers and a few corporates funded the entertainment sector, but the industry blew the money. While there was a good amount of money being invested in movies, the industry became greedy, out-priced itself and as a result the industry became sick, he said.
Describing 2010 as a challenging year for the industry, a FICCI KPMG report, has said that with better content, an increase in multiplexes, investment in research and continued cost correction, the industry is estimated to grow to Rs132 billion by 2015 from Rs83 billion at present.
The Indian film industry, which is multi-lingual, is the largest in the world in terms of ticket sales and the number of films produced. The industry is supported by a vast film-going public and Indian films have also been gaining in popularity in the rest of the world-notably in countries with a large number of expatriate Indians.
Each year, India produces over 1,000 movies in various languages. At the end of 2010, it was reported that in terms of annual film output, India ranks first, followed by the US (Hollywood) and China. In 2009, India produced a total of 2,961 films on celluloid with a staggering figure of 1,288 feature films, including 235 Hindi movies. Yet, only 2% of the films are able to garner 100% of their investment, while 98% of the movies flop.
Nirvaer Sidhu, vice-president for media and entertainment, GoldmanSachs India, said film producers today were looking at markets outside the classical mould, and foreign companies and studios were eyeing India with great interest. Investors, he said, were looking at mitigation of risks, for alignment of interests with project promoters, simpler business models and desired intermediaries to manage the interests of producers and studios.
Underlining the need to create an ecosystem similar to that of Silicon Valley and ways to attract investments from high networth individuals (HNIs), Ranu Vohra, managing director and chief executive, Avendus Capital Private Ltd, said, the entertainment industry is a high-risk, high-return business. This industry requires funding from corporations that have made it big and such an investment culture would spawn disruptive innovation, which would, in turn, throw up new funding models, like investment from family offices and slate financing.
Slate financing is an investment in a film portfolio, rather than a single film, in order to spread out the risk that comes in placing all the eggs in a single basket.